Tyco to pay $50 million SEC civil penalty

Securities fraud charges against ex-execs settled

TRENTON, N.J. -- Tyco International Ltd. will pay the Securities and Exchange Commission a $50 million civil penalty to settle allegations that the high-tech conglomerate's prior management violated securities laws, cooked the books and overstated financial results by at least $1 billion.

Under the proposed settlement, filed Monday in U.S. District Court for the Southern District of New York, the SEC's enforcement division will decide how to distribute the $50 million to harmed investors, rather than the government keeping it all, said James Coffman, assistant director of the division. He said his division is still investigating other people who may have been involved in the fraud.

The SEC's civil complaint states that the accounting fraud and other violations occurred from 1996 through mid-2002. That's when former CEO Dennis Kozlowski snapped up more than 700 companies, trying to turn little-known Tyco into a global manufacturing and services powerhouse with perpetual earnings growth.

Tyco, which has about 250,000 employees and $40 billion in annual revenues, makes electronics, medical supplies, engineered products and fire and security products.

The SEC's civil complaint states that from 1996 through 2002, the company filed with the SEC annual and quarterly reports, proxy statements and other documents that misrepresented the company's financial results, including not disclosing some compensation and loans worth tens of millions of dollars -- much of it later forgiven -- given to top executives.